Canadians continued to pile up non-mortgage debt compared with a year ago but delinquency rates remained low, according to credit monitoring agency TransUnion.
Average consumer non-mortgage debt balances rose to $21,686 at the end of the third quarter, up from $21, 195 in the same quarter last year.
The increase came as non-mortgage debt levels rose 3.57 per cent to $17, 969 in Quebec and 2.64 per cent to $21, 620 in Ontario.
However, while borrowing increased, serious national delinquency rates stood at 2.70 per cent, up from 2.62 per cent a year ago.
The change came as delinquency rates rose 13.39 per cent to 3.13 per cent in Alberta and 11.9 per cent to 3.46 per cent in Saskatchewan.
TransUnion forecast average debt levels to continue to rise over the next two years, but delinquency rates to move lower.
“The recent government outlook of weak economic conditions may have led some consumers to believe low interest rates will be here for a long time, which could result in pushing balances even higher due to low expected borrowing costs,” said Jason Wang, TransUnion’s director of research and analysis in Canada.
“With the latest data in hand, we think it’s especially important for lenders to continue monitoring and stress testing their portfolios to ensure they can maintain stable performance when interest rates do eventually rise.”
TransUnion raised concerns earlier this year that up to one million Canadian borrowers may have problems if interest rates rise by one full percentage point.
Canadians have piled on debt in recent years as interest rates have remained well below historical averages.
The Bank of Canada’s overnight interest rate target has been set at 0.5 per cent since it was cut twice last year.
The rate is a key variable for the big banks when setting their prime rates and the rates for borrowing, like variable rate mortgages and line of credit.
Original Article
http://barrie.ctvnews.ca/canadians-continue-to-pile-up-non-mortgage-debt-report-1.3154962
